"Let me guess.. You are an Anarcho-Capitalist who reads Rothbard or learned economics from Stefan Molyneux. Roll Eyes"
I prefer that to be a mystery. The dicussion should be over my arguments (and yours).
Ok its hard not to make that assumption because every you post sounds like it comes straight from some AnCap handbook.
Back to the argument of "if inflation can be measured using indexes like CPI or GDP". I say yes. But the models do get revised. The most accepted model comes from Bureau of Labor & Statistics
You think if the stats come from World Bank or BLS then its bunk because you don't "trust" these organizations due to personal politics. My argument is that they're data is academic and even though BLS is a govt agency. Doesn't imply that they do these studies w bias. They are professional economists & statisticians so their interest would be academic not partisan. Heres a paper where they explain how CPI is calculated if you care to read
http://www.bls.gov/opub/mlr/2008/08/art1full.pdfFurthermore, World Bank is not a political organization so why would they publish false data? What is the motive? Because they are "banksters" out to get the little guy?
Shadowstats has been debunked by a lot of economist bloggers so I dont need to argue why its bunk. It would take a tl;dr post. You can google it and decide yourself. But
nobody in the economics profession quote shadowstats data.
So I ask you what is more likely? Using Occums Razor.. Is shadowstats correct or the rest of the world correct?
I would say shadowstats is not correct in estimating inflation (in general price level), because changes in measurement (for instance changing the content in the shoppers basket) is necessary over time. You can not take a basket from forty years ago and apply it now, the product sortiment is not according to the preferences of todays consumers.
On the other hand, removing articles on the grounds that they show price volatility, is also incorrect and in fact absurd. If you want to measure the variation of price level, you can not take out the components that change.
The current consumer price index preferred by the Fed as the most relevant, is wrong, because it excludes products essential to consumers and is a large part of the total consumption. Food and energy - that must be close to half of the consumption for many consumers.
Then there is the fact that the composition of the reference never fits all consumers. The composition is different for each consumer, and varies greatly.
Then again there is some indexes (chained) that continually adjusts the basket based on the prices. It gives a lower number-
Then in some countries, price level abroad is included, the idea is that the consumer is on vacation abroad sometimes.
Adding this confusion together, and knowing that the resulting index number has profound consequences for the liabilities of the government, the suspicion is that a low number is preferred.
A fundamental question in relation to the value of money, is that you have to include more than the most common consumer goods, you need to take price of capital goods into account also.
The measurements of gross domestic product and money velocity have exactly the same fundamental problems.
That is a bouquet of reasons to say that fundamentally, it is not computable. It is possibe to measure and compute numbers, but standard economics of today is poisoned by numbers. And look at the research reports of today - differential equations and third root and whatever - when you start out with badly defined and fundamentally unmeasurable parameters, that is just hogwash.
Austrian economy does not try to compute these things, but rather start out from some axioms relation to individual's actions of choice, and builds upon that with logic. That is why I like it.
